Should I Buy a Home Warranty to Cover My AC Unit?

I’ve been asked “Should I buy a home warranty plan to cover my AC Unit?” many times over the years. More recently the question popped up on a Facebook group for people who live in Chandler, AZ and the post got literally hundreds of comments. Since my articles are typically based on questions we hear all the time, it was clear to me this was something I should post about.

First things first; I want to establish that all home warranty companies are not created equal, just the same way all air conditioning contractors are not created equal. In other words, this article is not intended as a blanket-statement that home warranty companies in general are no good. I’ve talked to people over the years that are extremely satisfied with their home warranty company, and others that would have you believe they are owned and run by the devil himself! That said, unfortunately many more people seem to feel the latter than the former.

This article reflects myexperience with multiple home warranty companies as:

An air conditioning service technician prior to starting my own HVAC Company.

The owner of an HVAC Company who (at one time) worked for the home warranty companies.

Both a technician and company owner who has direct knowledge and feedback from thousands of home warranty company customers over the last 30-years.

Lastly, this article is strictly pertaining to your home’s central air conditioning and heating system(s) and whether or not it’s worth purchasing coverage for it. I’m not going to cover other appliances, electrical, or plumbing in this article (if I get demand for more, I’ll do a follow up article on those as well).

My experience as an air conditioning service technician working for other companies before starting my own.

Homeowners were usually thoroughly annoyed by the time I arrived because they had typically been waiting days or even weeks to get an appointment in the summertime. This is because home warranty work is low priority to an air conditioning company…their customers will always come first.

Often, I would find out I was there as a 2nd opinion or “call-back” after another company didn’t fix it right the first time or only got authorization for the Band-Aid repair. This is because most established air conditioning companies refuse to work with home warranty companies (discussed below) so many of their “vendors” aren’t exactly the cream-of-the-crop, or in the case of the Band-Aid authorization…

Band-Aids: Many times, AC components fail because of a bigger problem. Home warranty companies want the cheapest fix, not the long-term fix. In fact, even if a technician is on the phone with them telling them “___ part needs to be repaired so this won’t happen again”, the rep. will deny the additional work deeming it “preventative” therefore “not covered”. HW Companies only cover components that have failed, not components that are failing.

Cheap parts: The warranty companies have relationships with parts suppliers and usually want to provide the parts used for the repairs. The problem is they typically buy the cheapest part they can get…parts a technician would not put in his own AC unit because; “you get what you pay for”.

Denials: There’s nothing worse than explaining to an already frustrated homeowner that probably waited for days to finally get an air conditioning technician to their home in the first place, that their warranty company is denying the claim. The list of reasons these companies have to justify denying a claim is long and wrong.

Repair vs. Replace: There are conditions where repair is just impractical and if dealing directly with the customer, my advice as a technician would be to replace the equipment for improved comfort, efficiency, and plain common sense. The home warranty company however will only replace a unit that is unrepairable (very rarely is a unit unrepairable). Even when deemed unrepairable, they provide the cheapest, least efficient “pieces” of new equipment, not complete new “systems”.

My experience as the owner of a HVAC Company in Mesa, AZ who once was a vendor for multiple home warranty companies.

Magic Touch Mechanical was a vendor for six home warranty companies for our first few years in business. These companies can be a great source of new business for a young company with little to no marketing and advertising funds. The objective for a business owner being; to meet new customers and hopefully wow them with great customer service and convert them into a long-time client. After several years of running hundreds of service-calls for the home warranty companies I made the decision to stop taking their business for the following reasons:

Contractors are “measured” not by their success rate, customer feedback, or skill-set, but by “lowest average invoice”. This is not speculation on my part, I was actually told this by a home warranty company representative. In other words, those who are willing to make the “Band-Aid” repair, find reasons why coverage is not applicable (so the homeowner pays for the repair not the warranty company), etc. are rewarded with more calls. Obviously, this puts the policy holder at a huge disadvantage, but makes the warranty company shareholders very happy.

Very low margin, pre-determined, diagnosis and repair payment rates. Because the contractor knows he is working for very low margins, he has to make up for it with speed. We’ve all heard the old saying, haste makes waste. While some contractors might be willing to cut corners to finish fast and move on to the next job, I was not willing to put my name on work like that and therefore often lost money on these jobs.

Long on-hold times for approvals. A common complaint when reading reviews of home warranty companies and their service providers are contractor “no shows”. Most contractors know when booking a home warranty call, they will be on hold for a long time after diagnosing the problem to get approval. The disadvantage to the policy holder is they are frequently “bumped” if a “better call” comes in. The disadvantage to me was being the contractor who got the call next, arriving to a now very frustrated homeowner.

Re-negotiation. The final straw for me personally was; after waiting over 90 days to get paid for services rendered from one of the biggest and most well know warranty companies – receiving a call from one of the head honcho’s wanting to “renegotiate” over $10,000 in past due invoices in order to “be able to get you paid quicker”. You did not misread that, he actually told me if I was willing to accept less money than they already agreed to pay, which was already long overdue, he could “get me paid quicker”.

The reason the points above matter to the policy holder is this: Take a company like Magic Touch Mechanical, we are very highly rated everywhere you look, are rated A+ by the BBB, A on Angie’s List, 5-Stars on Kudzu and Recommend-Me, well-trained technicians, etc. etc. – you’re not going to get “Magic Touch” when you have a problem with your AC if you go through a home warranty company – but you can most likely get same day service if you do not.

Not to say every contractor that works for home warranty companies are bad, some are probably great – we are, and we worked for them at one time. But you have to ask yourself; do you feel lucky? And are you willing to take the chance of not knowing what you get until they get there? Even when you do know the company beforehand, and they are a reputable company, do you really think they’re sending one of their best to the lowest margin call of the day?

My experience as both a technician and company owner who has direct knowledge and feedback from thousands of home warranty company customers over the last 30-years

Twenty years later, many of our clients were people I originally met through a call from a home warranty company. Many were at their wits end with their home warranty company and were so happy to finally get good service they became Magic Touch customers and dropped their home warranty.

I’ve owned, or worked for an HVAC Company for the past thirty years. In that time, out of thousands of home warranty customers I’ve met with, I would say 75-80% expressed dissatisfaction with their warranty.

RECOMMENDATIONS

If you were thinking of hedging your bets and covering yourself in the event of a catastrophic failure of your HVAC equipment, thinking you’ll be covered for a whole new central air and heating system…you’re probably in for more frustration and disappointment than you bargained for.

Find a good HVAC contractor to provide your maintenance and minor repairs as necessary, and when replacement time comes, you’ll get to choose the right system for you, your budget, and your needs – instead of a cheap-o, make-shift, budget unit.

If you’re nervous because you’re not sure how much a new central air conditioning system cost, read this article for your answer!